9911796707
TMI Blog1963 (12) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... of goods specified in the first column of Schedule B subject to the conditions and exceptions, if any, set out in the corresponding entry in the second column thereof and no dealer shall charge sales tax on the sale of goods which are declared tax-free from time to time under this section." In Schedule B, item 49 exempts "Indian food preparations ordinarily prepared by tandoorwalas, lohwalas and dhabas: when sold by persons running tandoors, lohs and dhabas exclusively." It is the benefit of this exemption that the petitioner claims when he avers that his establishment is a dhaba and not a hotel. The second question that is raised by the petitioner is that under sub-section (4) of section 11 the assessing authority must proceed to assess, in the case of best judgment assessment, within three years preceding the date of assessment; otherwise it is said that assessment is barred under that provision as has been held in Madan Lal Arora v. Excise and Taxation Officer, Amritsar[1961] 12 S.T.C. 387; A.I.R. 1961 S.C. 1565., in which their Lordships have held that the three years within which the authority could proceed to make the best judgment assessment have to be counted from the end o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ows that in cannot be counted from any point in the middle of the quarter. This argument is entirely without force. Section 5 of the amending Punjab Act 2 of 1963 having extended the period under subsection (4) of section 11 from three to four years before the right to assess under the unamended sub-section (4) of section 11 expired in the case of the petitioner, the assessing authority has been right in making the assessment on the petitioner within the time prescribed under sub-section (4) of section 11 as it stood on the date it made the assessment order. The Punjab General Sales Tax (Amendment) Act, 1962 (Punjab Act 8 of 1962), has by section 2 amended sub-section (5) of section 4 of Punjab Act 46 of 1948 and thereby added to that sub-section clause (bb) which when incorporated in sub-section (5) reads in this manner: "In this Act the expression 'taxable quantum' means-(bb) in relation to any dealer, who runs a tandoor, loh, dhaba, hotel, restaurant or other similar establishment wherein Indian food preparations including tea are served, 25,000 rupees." Having made these establishments liable to sales tax at the taxable quantum of Rs. 25,000, this amending Punjab Act 8 of 1962 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6(1) of the Act and by reason of this he was not liable to sales tax. The effect of the amendment no doubt is to withdraw that exemption. The withdrawal of the exemption by the deeming provision retrospectively cannot in fact obliterate the actual fact, namely, that the exemption has been enjoyed and at the time when the exemption was enjoyed it was lawfully enjoyed. No deeming provision can make what is lawful unlawful. If the Legislature wants to impose a tax retrospectively it would say so. The authorities cannot recover a tax retrospectively by recourse to the deeming provision which merely withdrew the exemption. I cannot attribute to the Legislature an intention to take away the exemptions enjoyed by persons who were lawfully exempted from the tax under the Act. If the Legislature wanted to do so, it would have expressly said so. There is no provision in the amending Act authorising levy of sales tax retrospectively, and the tax which had not been imposed cannot be deemed to have been imposed by recourse to section 3 read with section 1(2) of the amending Act, as is sought to be done by the authorities in this case." Relying on this case learned counsel for the petitioner has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve expressed itself in any other clearer language. The effect of section 1(2) of this amending Punjab Act 8 of 1962 is to withdraw the exemption in item 49 of Schedule B of the principal Act on and from 1st April, 1959. This is an express statement in this amending Act. The Legislature has power to grant exemption as also to withdraw an exemption. It has power to make taxing law retrospectively imposing tax where previously there was no imposition of tax, Union of India v. Madan Gopal Kabra [1954] S.C.R. 541 at p. 554; 25 I.T.R. 58., Tata Iron & Steel Co. Ltd. v. State of Bihar [1958] 9 S.T.C. 267., Chhotabhai Jethabhai Patel & Co. v. Union of India A.I.R. 1962 S.C. 1006., and Rai Ramkrishna v. State of Bihar A.I.R. 1963 S.C. 1667., and in my opinion it follows from these authorities that the Legislature can not only make a taxing statute imposing tax retrospectively but it can withdraw an exemption already granted retrospectively. A deeming provision creates a statutory fiction, and while such a statutory fiction is to be strictly construed, to the extent it is effective and clear it must be given effect to. When section 1(2) of the amending Punjab Act 8 of 1962 says that this ame ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les tax is an indirect tax on the consumer. The idea is that the seller will pass it on to his purchasers and collect it from them. If that is the nature of the sales tax then, urges the learned Attorney-General, it cannot be imposed retrospectively after the sale transaction has been concluded by the passing of title from the seller to the buyer, for it cannot, at that stage, be passed on to the purchaser. According to him the seller collects the sales tax from the purchaser on the occasion of the sale. Once that time goes past, the seller loses the chance of realising it from the purchaser and if it cannot be realised from the purchaser, it cannot be called sales tax. In our judgment this argument is not sound. From the point of view of the economist and as an economic theory, sales tax may be an indirect tax on the consumers, but legally it need not be so. Under the 1947 Act the primary liability to pay the sales tax, so far as the State is concerned, is on the seller. Indeed before the amendment of the 1947 Act by the amending Act the sellers had no authority to collect the sales tax as such from the purchaser. The seller could undoubtedly have put up the price so as to include ..... X X X X Extracts X X X X X X X X Extracts X X X X
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